Checklist to Keep in Mind before Applying for a Reverse Mortgage Loan
Reverse Mortgage Loan is a type of financial facility that permits senior citizens to mortgage their premises and get a source of income. Reverse Mortgage Loan is among the best financial solutions for retirees. Hence, if you have a residential property with a residual life of 20 years, then you can apply for the Reverse Mortgage Loan.
The most immediate benefit of the Reverse Mortgage Loan is that you can apply for it without any liability for repayments. Yes, you either get a monthly amount, lump sum money or a line of credit to meet your needs. And for that, you don’t need to bother paying the EMIs.
It means you can use your residential property to make way for a source of income and yet don’t need to arrange for any repayment. The repayments are made only if you move out or sell it. In case if you pass out, then it becomes the property of the lender.
But before you apply for the Reverse Mortgage Loan, you ought to consider a few aspects beforehand. Let’s know more in this post!
Do you have the required eligibility?
Many people apply for the Reverse Mortgage Loan without checking out the eligibility and face rejections. Hence, before doing that, it becomes a must to check out the loan eligibility. The standard loan eligibility includes:
- You need to be aged at least 60 years. If you are applying with your spouse, then one of you needs to be 60 while the age of the spouse should be 55.
- The ‘to be mortgaged home’ should be owned by the applicant with a residual life of not less than 20 years.
- The property should be free from all legal issues and carry no encumbrances or liabilities.
Do you have the required documents?
The applications of many borrowers also get rejected due to non-submission of the required documents. Thus, you need to make sure you have the following documents such as:
- Identity proofs such as PAN, Aadhaar, Voter ID, Employee ID Card, Passport etc.
- Address proofs such as Passport, Utility Bills and Voter ID Card.
- Proof of ownership of the property to be mortgaged.
- Passport size photographs.
Are you aware of the fees and charges of the loan?
The charges and fees for the Reverse Mortgage Loan may differ from lender to lender. Some standard charges may include:
- Processing fees.
- Stamp duty and mortgage registration charges.
- Prepayment charges
What about Reverse Mortgage Loan interest rates?
The applicable rate of interest on Reverse Mortgage Loan also varies from a loan provider to loan provider. The rate of mortgage loan rates may be higher than that of home loans.
Did you know you can enjoy tax benefits?
If you have retired and want to apply for the Reverse Mortgage Loan facility, then you can enjoy tax-free earnings. Section 10 (43) of the Income Tax Act permits that the pay-outs received in any form is not to be treated as an income. Therefore, the payments that you get out of the Reverse Mortgage Loan are non-taxable.
Also, Ensure the following Aspects
While applying for the Reverse Mortgage Loan, you should ensure to follow the below tips beforehand:
- Don’t sign any document that you don’t understand.
- Keep an eye on unsolicited Ads and don’t respond without confirming their genuineness.
- Avoid getting into the claims of home ownerships with zero down payments.
- Consult a financial consultant before applying for the Reverse Mortgage Loan.
By considering these vital aspects, you will be in a better position to apply for the Reverse Mortgage Loan with confidence.